The overall number of U.S. homes for sale dropped 6% from a year earlier during the four weeks ended June 11, the biggest decline in 13 months, Redfin said Thursday.
The Seattle-based, digital real estate brokerage said new listings dropped 23%, continuing a 10-month streak of double-digit declines. There are 39% fewer homes for sale now than there were in June 2018, before the COVID-19 pandemic.
The inventory shortage is partly due to a homebuilding slump that’s lasted for over a decade, and partly to mortgage rates falling to record-low levels during the pandemic, then shooting up, Redfin said.
Mortgage rates have more than doubled since 2021, closing in on 7% this week. The record-low mortgage rates of 2020 and 2021 drove a home-buying boom that depleted inventory. When rates began rising at the start of 2022, many would-be sellers backed off. Elevated rates discourage homeowners who prefer to hold onto a comparatively low rate from listing their homes for sale.
Pending home sales are down 17% year over year, the biggest decline in over four months, but it isn’t all due to a lack of demand. People are still showing interest in buying., Redfin said.
Mortgage-purchase applications rose 8% over the last week, and Redfin’s Homebuyer Demand Index — a measure of requests for tours and other services from Redfin agents — is up over the last two weeks, nearing its highest level in a year. That means there’s pent-up demand, and many buyers will be ready to pounce when more homes hit the market.
Demand outpacing supply is also preventing home prices from falling drastically — the median sale price is down just 1.1%, the smallest annual decline in three months, Redfin said.
This week’s economic news indicates that mortgage rates are unlikely to decline in the next few months, which could mean new listings stay low and the inventory shortage deepens. The latest inflation report showed that price increases have continued to cool, and the Federal Reserve announced Wednesday that it will not increase the federal funds rate this month after 10 increases in the previous 14 months, but may raise the rate a couple of more times this year.
“The Fed’s indication that there are more rate hikes to come is not what homebuyers want to hear. It’s likely to keep mortgage rates elevated and may even push them up a bit,” said Redfin Economics Research Lead Chen Zhao. “People who are sitting on the sidelines, waiting for mortgage rates to decline, should know that’s unlikely to happen in the foreseeable future. If a home that's in your price range and has everything on your wishlist hits the market, there's no good reason to wait.”
Leading Indicators Of Homebuying Activity:
- The daily average 30-year fixed mortgage rate was 6.95% on June 14, down from a seven-month high of 7.14% three weeks earlier but up from about 6.6% a month earlier. For the week ended June 8, the average 30-year fixed mortgage rate was 6.71%, down slightly from 6.79% the week before but still close to the highest rate since November.
- Mortgage-purchase applications during the week ended June 9 increased 8% from a week earlier, seasonally adjusted. Purchase applications were down 27% year over year.
- The seasonally adjusted Redfin Homebuyer Demand Index was essentially unchanged from a week earlier during the week ended June 11, but up from two weeks earlier. It was up 7% YoY, the third consecutive annual increase. Demand was dropping at this time in 2022 as mortgage rates rose.
- Google searches for “homes for sale” were up 15% from a month earlier during the week ended June 10, and down about 10% YoY.
- Touring activity as of June 11 was up 20% from the start of the year, compared with a 4% increase at the same time last year, according to home tour technology company ShowingTime. Tours declined during this time last year as mortgage rates rose.
Key Housing Market Takeaways:
Unless otherwise noted, the following data covers the four-week period ended June 11. Redfin’s weekly housing market data goes back through 2015. For bullets that include metro-level breakdowns, Redfin analyzed the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy, Redfin said.
- The median home sale price was $381,169, down 1.1% from a year earlier, the smallest decline in more than three months. Price declines have been shrinking for the last seven weeks.
- Home-sale prices declined in 31 metros, with the biggest drops in Austin, Texas (-13.1% YoY), Las Vegas (-9%), Oakland, Calif. (-7.4%), Phoenix (-6.9%), and Los Angeles (-6.7%).
- Sale prices increased most in Miami (8.9%), Cincinnati (8.3%), Fort Lauderdale, Fla. (6.1%), Milwaukee (5.9%), and Virginia Beach (4.8%).
- The median asking price of newly listed homes was $398,475, up 0.3% from a year earlier.
- The monthly mortgage payment on the median-asking-price home was $2,640 at a 6.71% mortgage rate, the average for the week ended June 8. That’s down slightly from the record high hit two weeks earlier, but up 8% ($200) year over year.
- Pending home sales were down 17.1% YoY, the biggest decline in more than four months.
- Pending home sales fell in all metros Redfin analyzed. They declined most in Providence, R.I. (-30.8% YoY), Portland, Ore. (-29.1%), Milwaukee (-28.2%), Seattle (-26.9%), and San Diego (-26.6%).
- New listings of homes for sale fell 23.3% YoY, similar to declines over the past two months.
- New listings declined in all metros Redfin analyzed. They fell most in Phoenix (-40.9% YoY), Las Vegas (-40.5%), Oakland (-39.6%), Seattle (-35.9%) and Anaheim, Calif. (-34.7%).
- Active listings — the number of homes listed for sale at any point during the period — fell 6.3% from a year earlier, the third straight YoY decline and the biggest drop in over a year. Active listings were essentially unchanged from a month earlier; typically, they post month-over-month increases at this time of year.
- Months of supply — the number of months it would take for the current inventory to sell at the current sales pace — was 2.6 months, up from 2.1 months a year earlier. Four to five months of supply is considered balanced, with a lower number indicating seller’s market conditions.
- Of the homes that went under contract, 33.2% had an accepted offer within the first two weeks on the market, down from 37% a year earlier.
- Homes that sold were on the market for a median of 28 days, the shortest span since September but up from a near-record low of 19 days a year earlier.
- 35.9% of homes sold above their final list price, the highest share since last August but down from 54% a year earlier.
- On average, 5.3% of homes for sale each week had a price drop, up from 4.3% YoY.
- The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, was 99.9%. That means, on average, homes are selling for almost exactly their asking price. That’s the highest level since August, but down from 102.3% YoY.
